Another challenger bank is set to get in the ring

There could soon be another retail bank in the UK, with news that Masthaven Finance has submitted an application for a banking licence.
Masthaven, which is a mortgage lender, says it is planning to launch next summer, and it has met the regulatory capital rules.
“This is a hugely exciting time to launch a new retail bank in the UK,” says Jon Hall, who will be the bank’s managing director.
“For too long, savers and borrowers have had to dance to the tune of the big banks. The Masthaven approach will be different, recognising that no one size fits all and that everyone’s individual financial backgrounds and requirements vary.”
Charlotte Nelson, at Moneyfacts.co.uk, says the so-called challenger banks have helped shake up the market.
“Savers now have more opportunity to achieve a higher rate of return, but they must look away from the more traditional providers to secure the best rates,” she says.
“For example, the average easy access account from high-street providers is 0.61%; however, challenger banks offer a much better rate of 1.08%.
“Savers need to vote with their feet, moving to the new challenger brands, which offer the best chance for achieving a market-leading rate.
“As it is relatively easy to check whether these new savings providers are protected by the Financial Services Compensation Scheme or a European equivalent, there should be little to be nervous about.”
Kevin Mountford, of Moneysupermarket, says: “Traditional banks aren’t fighting for our money, so the ever increasing number of new entrants in the market is good news. Competition is already improving and we are seeing a significant increase in the savings rates being offered by these alternative banks.
“Many UK savers have their money in accounts with average rates less than the Bank of England base rate, but right now they can switch to an account with a higher rate of interest and earn three or four times as much from their money.
“With Masthaven Finance applying for a banking licence, I’m hopeful we are going to see even more consumer-led products and innovation in the market.”